NAC files, lot 60 D 137, “Minutes”
Minutes of the 212th Meeting of the National Advisory Council on International Monetary and Financial Problems, Held at Washington, July 2, 1954
Mr. W. Randolph Burgess (Acting Chairman), Treasury Department
- Mr. Andrew N. Overby
- Mr. Clarence E. Hunter
- Mr. W. L. Hebbard
- Mr. Henry J. Bittermann
- Mr. Philip P. Schaffner
- Mr. Charles R. Harley
- Mr. Donald W. Curtis
Mr. Samuel C. Waugh, State Department
- Mr. Jack C. Corbett
Mr. Samuel W. Anderson, Commerce Department
- Mr. Clarence I. Blau
- Mr. Frederick Strauss
Mr. Arthur W. Marget, Board of Governors, Federal Reserve System
- Mr. Frank M. Tamagna
- Mr. J. Herbert Furth
Mr. John Stambaugh, Foreign Operations Administration
- Mr. Warren W. Shearer
- Mr. Jacob J. Kaplan
- Mr. Jack F. Bennett
Major General Glen E. Edgerton, (Ret.), Export-Import Bank
Mr. Frank A. Southard, Jr., International Monetary Fund
Mr. John S. Hooker, International Bank
Mr. Percival F. Brundage, Bureau of the Budget, Visitor
Mr. Neil H. Jacoby, Council of Economic Advisers, Visitor
Mr. Clayton E. Whipple, Department of Agriculture, Visitor
Mr. George H. Willis (Acting Secretary)
- Mr. C. L. Callander (NAC Secretariat)
[Here follows discussion of convertibility problems.]
2. Proposed International Finance Corporation
Mr. Overby presented NAC Document No. 1649,1 in which the Staff Committee submitted for the consideration of the Council three possible alternative United States positions on the proposal for an International Finance Corporation, for use at the 18th Session of ECOSOC.
[Page 287]Mr. Anderson suggested that as part of the United States preparation for the Economic Conference in Rio,2 it would be wise to develop a proposal for the establishment of an IFC as an experiment for a term of 5 years with a provision for its automatic liquidation at the end of that time unless two-thirds of the stockholders voted affirmatively to continue it. He felt that such a plan could appropriately be presented to the Rio Conference as a United States policy proposal for submission to the next Congress. Thus, he favored a suitable modification of Alternative B. Mr. Overby outlined the principal substantive arguments against the IFC, i.e., that the use of Government funds for equity investment is not desirable; and that the operations of an IFC by shielding underdeveloped countries from the forces that might otherwise persuade them to establish attractive conditions for private investment, would discourage private investment rather than encourage it.
Mr. Waugh argued that the proposal was substantial and important and that, therefore, the 17 months already elapsed was not an unreasonable period of time for the new administration to study it. He felt that the Export-Import Bank has been doing a substantial business in loans, and that the Foreign Operations Administration loan policy proposals may be significant. He did not like the use of United States Government funds in equity financing and thought that the possibility of regional development banks might be explored more fully. He stated that the Department of State preferred Alternative B with the thought of examining the case again in a year. He would oppose any announcement of intention at the Rio Conference and would rather prefer to see the United States Delegation discuss what had already been done by the Export-Import Bank and F.O.A.
Mr. Marget favored the substance of Alternative B with perhaps some revision of the language, with the understanding that there be no United States commitment to the proposal. General Edgerton and Mr. Whipple indicated that their preference would be for Alternative A. Mr. Overby suggested that any further study of the proposal should be done by the International Bank rather than by ECOSOC.
Mr. Burgess summarized the discussion by saying that the consensus was in favor of Alternative B without too much encouragement for the idea of establishing an IFC. He suggested that the Staff Committee could work out any revisions in the wording of the [Page 288] position paper that seem necessary in view of the discussion (see NAC Document No, 1650).3 The Council agreed to this suggestion, and approved Alternative B as amended at the meeting.
Action: The following action was taken (Action No. 708):
The National Advisory Council approves the following position on the proposal for an International Finance Corporation, for the 18th Session of ECOSOC:
- 1.
- The U.S. Delegation should state that, after careful consideration, the U.S. Government is unconvinced that the establishment at this time of an International Finance Corporation is either a necessary or desirable addition to existing institutions for the financing of economic development, or to measures for stimulating private investment available to individual governments acting unilaterally or bilaterally.
- 2.
- The U.S. Delegation should be authorized to support action by the ECOSOC calling for further study or consideration of the IFC proposal, preferably by the International Bank. The Delegation should, however, be empowered to abstain if necessary to avoid an implication of U.S. support for the establishment of an IFC.
- Supra.↩
- The Meeting of Ministers of Finance and Economy was convened as the Fourth Extraordinary Meeting of the Inter-American Economic and Social Council at Quitandinha, Brazil, on Nov. 22, 1954. For a list of the U.S. Delegation to the meeting, see Department of State Bulletin, Nov. 29, 1954, pp. 837–838. For documentation, see vol.iv, pp. 313 ff.↩
- Not printed. (NAC files, lot 60 D 137, “Documents”)↩